nikkei 225 risk a potential minor rebound 1841812017

Short-term Technical Outlook (Wed, 18 Jan 2017)

(Click to enlarge chart)

What happened earlier/yesterday

The Japan 225 Index (proxy for the Nikkei 225 futures) has continued to drop as expected and almost hit the first medium-term target/support at 18600 (printed an intraday low of 18645 in today’s Asian session).

Please click here to recap our latest weekly technical outlook published on Monday, 16 January 2016.

Key elements

• Elliot Wave Principal and fractal analysis – from its high of 19713 printed on 09 January 2017, the Index has traced out three waves of a minor degree with the recent wave iii down wave minimum potential target at 18630 which is closed to the 18600 graphical support. These observations suggest that a potential corrective rebound (dead cat bounce) of a minor degree is likely to occur at the juncture (wave iv).
• The hourly Stochastic oscillator has shaped a bullish divergence signal at its oversold region which indicates that the recent downside momentum of the decline is overstretched. This observation advocates for a potential mean reversion in price action to the upside.
• The near-term resistance now stands at 19000 which is defined by a confluence of elements. The former minor swing low area of 13 January 2017, close to the descending trendline from 09 January 2017 high and the 50% Fibonacci retracement of the recent down move from 13 January 2017 high of 19381 to today’s intraday low of 18645.

Key levels (1 to 3 days)

Pivot (key support): 18600

Resistance: 19000

Next support: 18230

Conclusion

As long as the 18600 short-term pivotal support holds, the Index is likely to shape a potential mean reversion rebound towards 19000 within a medium-term bearish trend.

However, failure to hold above 18600 may invalidate the short-term rebound scenario to see the continuation of the decline to towards this week medium-term target/support at 18230.

Charts are from City Index Advantage TraderPro

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this email, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs. All queries regarding the contents of this material are to be directed to City Index, a trading name of GAIN Capital Singapore Pte Ltd.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.